While the conflicts created by vertical integration are well-known in financial planning circles – whispered about over beers at conferences and in the pages of this publication – never before has an adviser currently licensed by the institutions spoken out so loudly or articulately.

Writing to his local MP, assistant defence minister Stuart Robert, Mr Wood raised concerns often voiced off-record to ifa by institutionally aligned advisers – the conviction that choosing a licensee is not a fair choice, and that the “cumbersome and expensive process” of self-licensing effectively forces most into a commercial relationship they never really desired when embarking on their small business journey.

At length the practice principal described what he sees as the lip-service approach to flexibility and transparency at institutionally-owned licensees, arguing that most insto dealer groups “develop APLs which virtually exclude all other products from providers who compete with their parent company”.

Of the 50-plus comments on the associated news article, most came out in support of Mr Wood, congratulating him for making such a public plea in the consumer’s best interests. Others rejected the notion that institutional licensing is the only choice, urging Mr Wood to vote with his feet rather than voice loud complaints.

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One responder, describing himself as a NAB-aligned financial planner, stood out. In an intelligent critique of Mr Wood’s submission, reader ‘Dave’ asked whether the whole debate over vertical integration places undue significance on product recommendation. “Is there really much difference between the various wrap accounts on offer, or the platforms on offer?” Dave asked. “Slight differences in fees, investment menus etc. doesn’t really matter that much; the value we provide to clients is in the advice we give them, initially and ongoing”.

Dave’s point is a cogent one. Giving advice restricted to one provider may not harm a client. Indeed, with the levels of competition in the industry, a single product manufacturer may provide a range of financial products sufficient to an entire client base reaching their financial goals.

However, the vertical integration debate is not necessarily about the end result to clients, it is about the impression they have when they walk in the door. It is about developing a culture of disclosure and transparency across the entire profession and paying respect to the consumer’s ‘right to know’.

Even the SMSF Professionals’ Association (SPAA) – a body not known for rocking the boat – came out strongly against product conflicts in the financial advice industry, going so far as to call for the introduction of a new licensing regime for independent advisers, akin to the Registered Independent Advisor regime in the United States. A separate licensing tier for independents would encourage greater numbers to shun institutional backing, SPAA suggested.

The Rudd-Gillard government inconspicuously ignored the issue of vertical integration when drafting the FOFA legislation, somehow deciding that ‘fee disclosure’ was a more pressing concern than disclosure of conflicts of interest emanating from licence ownership. In fact, the whole FOFA process has been a distraction from this most significant of trust issues for the financial services industry.

Given that David Murray once headed up the largest vertical integrator in the land, it is an issue he will be familiar with.

Given the submissions he is now tasked with reading, it is an issue he cannot ignore.